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Is hospital employment for me?

            February 5, 2015

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Question:

Jennifer,

I have been approached by a nearby hospital interested in employing me. From what I can tell, no value will be placed on my practice, but I would be entitled to a nice salary and fewer headaches after the transition. What do you think?  

Appreciate your thoughts. 

Dr. Y

Answer:

To clarify, based on the question posed my answer assumes you are a solo practitioner and the hospital would be taking over your practice through some contractual arrangement or another.  Sounds like the proposed deal is a transfer as opposed to a purchase concept, and after the transfer you will have guaranteed employment.  Well, this proposed arrangement is, of course, pretty common these days with less or no value being attributed to "good will" (patient retention, reputation, etc.), and practitioners hoping away the administrative hassles of practice management, not to mention transferring reimbursement woes to another party. 

Whether or not the deal proposed is a good decision for you is completely based on the individual circumstances and we would have to have a much more detailed conversation to evaluate together, and I would also need your accountant involved in our discussion.  We will want to look at the present value/profitability of your practice, your administrative responsibilities, projected revenue post-closing, staffing pre and post closing, terms of employment and terms of transition as well as your right to maintain your autonomy post-closing (to name some of the more important aspects of these deals).  Of course this list is not exhaustive, and with these types of deals, the devil is always in the details.  The decision as to whether or not to accept hospital employment and transfer may at times seem a coerced one, "everyone else is joining, I will  be left out in the cold with problems with insurance carriers if I say no..." which is why the market value of practices has been so depleted.  Before rushing in, lets do the due diligence and see whether it makes sense. 

Also some good news (or bad, depending on how you look at it) - these deals are never done overnight. Most systems move very slowly with an acquisition because there are a number of moving parts that have to be addressed - transfer of records, transfer of real estate, working on employment terms, etc.  Sometimes they can be finished in a few weeks, sometimes much longer than that.  So, just because you have started the conversation, does not mean you have signed on the dotted line. 

Speaking of dotted lines, make sure you call our office before signing anything!  Including a non-binding LOI.  The LOI will set the stage for negotiations and just because its non-binding (is it?) does not mean you should sign blindly....

Hope this helps and happy to discuss further. 

 


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